PARIS—French Economics Minister Arnaud Montebourg said Tuesday that General Electric Co. should change its $17 billion offer for the power-equipment division of French engineering group Alstom SA, describing the current bid as "unacceptable."

Mr. Montebourg said he told Steve Bolze, chief of GE's power unit, Friday that the company needs to make a new offer, stressing the strategic importance of a crucial industrial supplier...